Crude

Crude Oil completes 5 waves on the quarterly chart with a long lower shadow [Call this wave A]. Implications are that a B wave started. Wave B can retrace 23.6% at 46$ conservatively, or go to 59$ near 38.2% or the wave 4 area in a more aggressive case. Wave a of B is complete and wave b of B down is now forming. Once complete we will have a better perspective of the final move up.

Here is the weekly chart to give you more perspective. Wave b down would see crude dip to 38.2% or 50% retracement of wave a. 36.20 and 34.50 respectively. From there wave c=a would project up to 55$.

DJ Euro Stoxx 50

European stocks have had a rally with the rest of the world but when you look at the averages compared to where they were last year its a pretty poor picture. This was the weakest rally yet. So it was all about the US in this rebound. The US is close to its Oct highs but the DJ Euro Stoxx 50, average for European stocks is at barely a 50% retracement and momentum indicators are already in sell mode.

To put it in Elliott wave perspective we completed wave B of Y, and wave C of Y down may have started which can go to 2370. That means European stocks are about to drop 21% in the next two months or so.

Chinese Yuan in question

Will the USDCNY hold the 6.44 level? The Chinese yuan has strengthened with the rest of the world currencies this time. Unusual as it usually does its own thing. Now with this wedge/triangle like formation I will be watching if the lines hold as support. If so then we can once again project some upside.

Switzerland

The upside down chart of Switzerland gives you an unusually bearish picture for now. Wave B is marked at 61.8%, and wave 1 is overlapped as in a leading diagonal followed by a wedge like pattern in wave 2. These counts could change but each correction is a triangle recently and then prices fall again [remember this is upside down so down is up].

Why it is all about Interest Rates?

Did you ever ask...

Do interest rate cuts create growth? If not why is there so much noise about it. Why instead of spending more money the government is pushing the RBI to do more?

2 trading days ahead of the RBI policy what to expect? Similar to when Modi was elected...''Nothing'', at that time the only way to drive up the market was to inflate, which was not the mandate. I wrote that in my June Long short report in 2014 and it was proven true over the next 20 months. Even today a look at this budget we are in tightening mode. A broad based recovery on the back of this  budget does not look possible. The recovery in 2010-2012 was on the back of previous inflation. India was saved by the Governor with a single Pill, Bond flows.
Now the only way to drive up the market is to drive down interest rates and a rate cut alone wont do it. So What will?

Debt market reforms, and open the floodgates of Foreign debt flows, Bond rates will fall, and banks will cut rates. rupee will strengthen acting as anti-inflationary tool, and all that put together we can all live through one more stock market bubble in India.

Japan Nikkei

Yesterday I discussed Europe and today Japan. Why are these important? Because as the dollar starts to fall, the Yen and Euro start to get stronger, the exact opposite of what they are expected to do with all the stimulus. So first we saw European stocks roll over and now Japan failed after a corrective bounce back to a trendline of the previous triangle.

USDJPY

USDJPY - I posted a chart at the March low expecting an up move. That went on for a few days only. Now it appears 3 waves up, so a good chance that an X wave completed near the 40dema, and wave Z down has started. Wave A of Z could be a 5 wave decline again going to 105. The 40 month average at 110 is the only support in between.